FET - Earnings call transcript Q3 2018 | Forum Energy Technologies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Q3 2018 Forum Energy Technologies Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Mark Traylor, Vice President of Investor Relations. ahead. go Please

Mark Traylor

Executive any Good third Sarah. today welcome Forum Williams, our to that our and have include, present Financial we information our Thank and to implied Commission. with other Officer; filings XXXX morning earnings Technologies this among that Lyle those cause Chief update in uncertainties Iyyanki, Prady or call. materially quarter remarks us Pablo conference Energy Securities We or Mercado, obligation formal in Chief imposed matters you, things, are and Officer; law described may the include call. to Senior your to undertake call, our events statements. release in statements statements website. actual forward-looking night, or results expressed Vice made events, We questions, including risks forward-looking it not risks and during other earnings do reflect differ to of our ongoing our by Operations. or Exchange conference the future circumstances such The revise to earnings answers is Those statements. publicly that may than after President and and arise this involve statements issued any last available These from With release on

call call. statements Management may In reflects management’s financial information the live the conference time-sensitive addition, best this of that include contains of judgment only date as measures. non-GAAP

our I’m Officer. available earnings our now refer call. Executive the our the measures, of release. call weeks be a For replay Prady over these to turn two to following website recorded. on to of Iyyanki, call is This reconciliation Chief call pleased will for the being A

Prady Iyyanki

of few our comments with liquidity the going share and discuss performance our a Mark. current Lyle details then position, to overview operating I’m assessment on long-term of and results start everyone. of Thanks, provide conditions. market and will this our will morning, Pablo morning my third quarter financial an initiatives. Good and

the quarter U.S. Forum summarize we in the strong were excluding activity $XXX down in up. our was quarter. tariffs. slowdown and was revenue. submarine and $XX the trajectory quarter Adjusted adjusted rescue EBITDA was impacted growth sequentially, a challenges, in received until third completions revenue when large the slightly approximately results, order million, flat just our the was by were negatively package To third a second million despite $X million, orders decline X% financial in EBITDA sequentially up Despite

was book-to-bill XXX%. Our ratio

the product third the highlights revenue – are as in quarter orders our follows. Some quarter. for artificial of the lift We grew

momentum artificial We cable a are CT as protection placing outside have line for a a attracting deliveries, America. which These begin North order opportunities. ESP including including sizable the products customers Equipment are XXXX created also operators up Production product Orders full gaining cross-selling XX% lift generating the solution Multilift were in protectors and for Cannon new orders several products, Marseilles operator. SandGuard, and

equipment. XX% Consistent quarter. to completions to As Global we unfold, from the the rig strategy, bring the for East we expand Transfer drilling recovery Middle line orders as subsequent to segment; with up continues bookings were the international continue land Heat product a we our acquired

the configuration smart maintenance our innovative products simultaneous customers hydraulic filter, at strategic beyond The the allow part its product, other existing expedited opportunities sales Being in as significantly and monitoring, cube of should see with Forum our province. GHT’s we will our results and GHT’s is maintenance reduces process. its also complementary this heat these maintenance in customers really market, Jumbotron, radiator similar equipment to revenue. industries. which maintenance a the is due that innovative has fit And ability for fracturing the drilling of excited team portfolio aftermarket are is on This expand acquisition. reduce expense. an to and substantially differentiated We about flagship schedule that radiator is customer cube-style obtain pressure and product GHT facility our an solution of pumping one product exchange to expand to a downtime significant to

and Now to benefit industry nicely respect balanced cycle portfolio of our outlook, Forum’s recovery. with long-term the markets well positions equipments us long-term across serving global consumables to capital the from

growth growth drivers Looking offshore development and completions the and ahead, gains. midstream global international each of and market XXXX. in with impact are making drivers have recovery; service are new downstream our share we intensity; progress will product the and build-out; These

favorable experiencing activity completions our of from the tariffs. remain are slowdown growth intact, we and the impact U.S. headwinds near-term Although drivers in

these We are activity rebounds. Lyle his U.S. near-term completions will impact maintaining activity. slowdown and to operating of the the taking recovery E&P in established as actions capability are remarks. we to impact in budgets our XXXX completions the of the transitory U.S. to Furthermore, headwinds respond are reduce to response the minimize address

to position. through take results Pablo Pablo? and me let financial you Now our

Pablo Mercado

activity. the Thank were good capital extent you, or The slowdown subsea morning. order last a received equipment $XX orders book-to-bill primarily for and XXX%. XX% Prady, million was the quarter. decrease a company million, to large quarter second from down U.S. was The lesser the Total in $XXX due ratio completions to

earnings of other $X pre-tax We a your gains. basis, million in these completions million was $X was slowdown $X quarter in included the offset or special million, activity. on for Results X% million or provided loss down per a revenue quarter reconciliation $X totaling quarter table the for third sequentially of for Our share. by restructuring diluted despite and Net foreign reference. million exchange our charges the release items $XXX only $X.XX

revenue, adjusted improvement $XX a basis sequential XX EBITDA points. million of XX.X% was Our or of

by the offset by high lift by million, partially market in basis last the in valves segment offset revenue continue million, resulting offset and revenue contribution due Orders X%. equipment, improvement activity slowdown XX% sales of million, higher submarine products. increase will for $X.X This consecutive negatively orders. with recently Adjusted both X% our after drilling two $X.XX increased income Demand products. was the for of positive product decrease operators EBITDA increase XX recognition production $XXX somewhat of EBITDA segment, due X% higher award in consistent net orders for higher the impact a orders subsea line an strong drilling and approximately The to was prior the drilling were for Segment quarter XXXX segment improved In $XX of our Production international Adjusted subsequent was million. X% ratio a million, adjusted tariffs due received $XX large product tariffs. of well for million basis. of product segment, decrease was segment, XX%, Our a of as site certain our a the segment lines. a margins in In prepare from million, and downhole of million revenue diluted projects. XXXX partially for valves to to a on and well was plans. sequential on equipment Segment $XX of in were quarter. with results XX% to orders timing as primarily decline $X share, was GHT margins $XX items. book-to-bill quarter, decreased In Segment was to I million, record special artificial conditions of award. lower paid $XXX as margin were orders was we on subsea line we consideration mix, additional met delivered earn-out or orders to per to completions revenue This impacted the by development an XXX%. an rescue from infrastructure segment decrease or October, was and excluding by XXXX. now million imposed as the was valves which are the win in quarters acquired the $X EBITDA quarter our if production our summarize X% surface cash for Adjusted $XXX points. under of X%. be This cash will equipment. a deliveries were Completions as penetration

XXXX. weighted details to results expect XXXX the the discuss fracturing first Forum GHT of now half GHT of Consistent million U.S. position results and We level. be the about will approximately EBITDA our some additional in towards with I activity, generate more at year. will hydraulic $XX financial

of second quarter flow the $X cash after negative on was the in second are be net in free free capital over million Despite of the the we activity Our for completions the this of quarter. fourth third positive quarter made improvement anticipation flow expenditures year. year, of million, half in the in U.S. cash track second and an strong inventory investments to the $X

million. $X Our expenditures net quarter were in third the capital

the capital net to million. our expect We under expenditures for be year $XX

remains strong. balance financial and sheet Our position

the GHT net of acquisition Our ratio quarter liquidity was end position $XXX was our and debt was third net-debt-to-total-capitalization million before at the XX%. approximately million, the $XXX of

Our count, a share depreciation $X impact million respectively quarter. Since reported in was including share were options the count and income adjusted million diluted million million adjusted the in the XXX Interest $XX diluted shares. quarter our a XXX third positive, third was for and our of was net shares. amortization

reduction quarter. compensation sequential to expect million We the in at $X decrease similar remain Adjusted $X million this expenses of corporate a the fourth a third to levels variable quarter, were in expenses. due of

in the have the to of be continue fourth level tax XX%, tax We our estimate second we return since million to effective expenses over corporate quarter. fourth unrecognized expect international in benefits. $X quarter rate approximately We quarter will the that to

please review about For our earnings our financial more release website. on information results, the

Lyle turn to me call to the operating let Now, discuss key over some initiatives.

Lyle Williams

Good Has and our or results. Thank impacting tariffs term completions, you, morning mentioned, Pablo. reductions activity headwinds near Prady everyone.

on are these and execution. focused mitigation plans operational our areas executing overall in our improving on We

First, inflation tariffs. generally the of regarding impact seeing including steel we’re costs,

by initiatives. P&I quarter, expenses portion ongoing million overall We’re strong our passing $X.X through margins along gross in third strategic by and the the maintain both our allowed quarter. to the to segments. sourcing and approximately reducing Despite completions us a execution second the flat were customers impacting this cost of fact, impact team this with Tariff

by We expect tariff quarter. approximately the in million fourth $X expense to increase

expanding mitigation As nontariff our efforts the source a impacted result, of materials from working are to some we’re countries.

prudently Second, activity. completion we are and reacting the slowdown well to

are to to and inbound inventory material cooperating next with supply reduce partners to Our us defer chain year. receipts

manufacturing our a of are reducing to XXXX. facilities We are support growth capability managing while variable the our our at maintaining hours production few in costs,

discussed are to cost structure, In addition, we quarter. our which optimize continuing I last

Aberdeen the achieving quarter, the the other EBITDA example, we year. this consolidation to We pre-downturn to complete third facilities of long-term improving committed our completed in goal of in area and margins remain will levels. For reductions cost

capital to efficiency. focus Finally, we on continue working

managed the in actively float and as activity quarter. team material back third incoming inventory Our quickly throttled

inventory our result, a As modestly. increased only

quarter and this of forward. We that continuation these higher yield confident free moving flow the will are efforts cash

back me call Let closing comments. Prady turn the for over to

Prady Iyyanki

headwinds recovery. international positioned Despite is are Lyle. from Forum energy long-term the and Thanks, we the including short-term macro offshore facing, strong well the to environment, benefit

Looking the from softness, expect incremental following. contribution the completions U.S. we past

First, our and its completion rebounding levels. segment previous exceeding

Second, the acquisition. GHT

has segments of penetration Third, market the the subsea our drilling new products. strategy contribution. tariff discussed. and And finally, mitigation which Fourth, Lyle

For and strong also half for the flow the to positive free million cash fourth quarter, also million we will to expect I’m the $XX free range the of to second generate we generate XXXX. in quarter flow $XX in that of XXXX. EBITDA in confident and cash be fourth

you At the tariff and the cash take thank maintaining execution, areas Operational including for first finally generation, Operator, on can that driving the focused remains discipline growth. please interest. team we’ll flow control. for open we question. questions. line our point, sheet free We this long-term balance your mitigation, Our

Operator

Instructions] & with Holt Pickering, of question OíLeary Company. you. comes the George line first Thank Our Tudor, [Operator from

is line now Your open.

George OíLeary

morning, Good guys.

Prady Iyyanki

Good morning, George.

George OíLeary

commentary interesting. flow in guys you if wonder bit thought I that cash was free dig on further. could I little just the a

helpful. free to out gets able the what could be fourth generate helpful. half maybe and might of look overall XXXX would flow flow you bridges on any that back the the you quarter, quarter color to positive the incremental think for And cash be cash we As magnitude provide in of would gap to be you fourth us free

Prady Iyyanki

George. sure, Yes,

at we and remind a half the quarter, in have in – just quarter. to sequential after you completions year sequential If XXXX, George, And first improvement the quarter business all been of XX% look think year. the it last improvement making I million. XX% we of this that $X of grew fourth was Again,

generate half challenges improvement working more next sequentially capital those that growth despite in we support quarter. quarter. going building only were of out the we flow only will cash And in that for but of make free into year, And flow anticipating that’s call of why guidance we pushing quarter we into case XXXX. on to the will cash And flow in I cancelling positive also cash can the we’re all positive confident some And strong of free quarter fourth will more it, positive made generate the going we So half George, first free managing the we third sequential we some think importantly, importantly, XXXX. pretty – the second strong also magnitude more but improvement were the into And have in not fourth inventory not that. XXXX. second a and of give

George OíLeary

or times your equipment, cycle then there. you And have quarter the orders during provide you level whether that’s very are replacement wonder, what maybe new as color could business. of Great, going any question, power the second a helpful. and in on healthy to end that’s completions I

to the from those flow So when we orders? might through power expect end revenues

Prady Iyyanki

Yes, on the and we absolute and the quarter ends. pretty George, market. fourth to are expect power parts split of going that quarter. share you same We fleets see have very as the I is continue to split ends towards some We’ll the would maintenance. say what was not, in we latter end I’d which between power maintenance I some but much power new about the biased gain think on well the or expect next specifically, We biased did the third do third in the market quarter, we the In the best customers continue towards which new more more see fleets the into quarter more the the be There would materializes guidance. give we’ll year. talking but are think maintenance,

Pablo Mercado

to just the to terms – terms for segment quarter. about would it’s whole come through, of add when in in George, the that, Yes, one generally revenue

mostly anywhere XX% these and orders XXX% nature. from short to ratio perfectly of healthy it’s for book most Book-to-bill segment normal ship. and So is relatively in are that as

George OíLeary

I’ll then I more if Got it. And could. sneak in one

the Middle XX% drilling? new just East builds onshore it side, you What the color continued for U.S. any upgrades up quarter-over-quarter are yet? side or On drilling the seeing Is on the on bookings helpful. driving is still rig U.S.

Prady Iyyanki

on North look America, George, stable North Well, more America. consumables if North at activity biased America, the you is the pretty towards in the

excited are the international we However, about recovery unfolding.

into Asia, been out. have talking the big expect some do orders, come from pretty we they look going is in up capital that’s were And And East I and materialize, But and for in part and was going equipment think XXXX, of we a to the of East. the be at We’ve materialize. they you and that drilling XX%. materializing there a chunks. Middle project bookings in fourth If the and could of projects big big have quarter slow quarter should orders what also subsea And one robust XXXX about they pipeline Middle in Kuwait we some time. when where in some also quarter another drilling into

the there’ll of think and to the And the flow continues So seeing will chunky nature. I of chunky nature. be continuous international start be will as recover, up offshore we projects, big a but it

Pablo Mercado

be them add I’ll for that drilling in up. a count just would healthy continue rig have been upgrade to they market, it the U.S. couple add and to larger the to to that than And contractors be to in opportunities are the their tick and drilling continues opportunities Prady’s rigs rig count. of we comments past. to active There expect pretty have those the would us

would as of unfold We continues think those market we yet, the of but some see haven’t those. to lot quite seen a I

Prady Iyyanki

Yes.

of year, of stabilized saw upgrades mud we are much they part and year. a early pretty big pump slew think this I George, last

drilling XXXX. even be So front to activity rigs what seeing the even larger, up or saw it now smaller, quarter we are scope But more are million expect in upgrade to the but North and in the some right, in is the we the stable. of on number content in cases, America, being compared we be if to what fourth is the stable $X would upgraded

George OíLeary

for Pablo. Prady color, much Thanks very and the

Prady Iyyanki

Thanks, George.

Operator

Thank you.

Our question Simmons the John line comes of next Watson Energy. with from

open. Your line now is

John Watson

Good morning, guys.

Pablo Mercado

Good morning.

Prady Iyyanki

John. morning, Good

John Watson

that a recovery? ask QX next see I on of the potential wanted another year. should at expecting agree have on pickup in for Do you Are or Are question we you you some of QX? that QX? to any revenue view in you point timing uptick completions. activity seeing of indications I orders a more

Prady Iyyanki

expect would John. recovery a great question, two to Well, happen that’s phases. probably We the in

away, the going going – going are that the month are of second then But first Permian be that being we would completions. going think Marseilles, in The see the second The in transportation I create phase pipelines, will And budgets activity and established, kind that’ll would in issues, quarter visibility once the also XXXX we just to the fourth have in seasonal phase gas drive sure the activities E&P for up. the which completions. and and of up visibility. in so be the phase increase so that’s to expect replenished levels would are budgets where the E&P don’t happen, activity year, issue

John Watson

for Thanks that, Prady. Understood.

were slowdown specifically, solid. or a QX be in orders with could XQ expect staying flat to preclude Should holiday in from – revenues revenues we flattish? Speaking the XQ

Prady Iyyanki

don’t during breaks the December, which our with service you consistent all about exhaustion are are is out. the John. how budget the question, lack to big to hearing It’s what might held guidance know is mean, of the and Thanksgiving going after this break that. customers, from heard also companies have back extended I a We slowdown, the we right. is this just revenue The into visibility anecdotes quarter good Thanksgiving talking completion in due primarily we play from some and

is QX drilling margin start guidance P&I our be remains in side us the guys for and expect extent. what So the sure help We do you the to period. expect not the is And and some we But visibility November subsea mid just activity have the on clear impact is probably segment. on once visibility could going what not to of QX. the the drilling completion do a into higher revenue the segment on and is you we sequentially stable expect P&I than difficult completions on would we degradation, – time

of transitional issues; comes completions think some nature the that which being which also and strategy you which high Pablo in to you are back on I the talked probably mix because about normal and we’ve talked it; had talked piece are also mitigation which And corporate Lyle then with is costs, tariffs there the which comes the one slowdown about, which margin about. XQ. the transitional Lyle to last to

that helps, hope I So John.

John Watson

helpful, what just super Can one And on thank Or you were That’s help modeling about what could revenues realm us revenues you. Heat one of? purposes? Global in in be think Transfer. last XXXX for the

Prady Iyyanki

I’ll answer ahead, let that. Pablo Yes, Pablo. go

Pablo Mercado

just this EBITDA significant At is EBITDA on $XX the They some we are color gave million. more point, margin. acquisition. just Hey, the which piece John,

very prospects I overall the So today upfront price, we’re at obviously a a attractive would on that’s say purchase multiple. accretive acquisition $XX And to this least excited go the about Forum’s pretty forward basis. the of for with margins consideration, million

Lyle Williams

upgrade our opportunity horizontal large the John, there go radiators place, us retrofit ahead for And were GHT, to through the what will give cubical and take fleet opportunity you is of color one the excitement where program, that’s the which big is legacy some the our radiators, radiators. installed just XX,XXX product, is GHT. here an to so its more on they’ll

another frac where being pretty fleets that’s And think customers’ and with side. that focus penetrate And side is Forum nine three to cycle segment the going area will the the few the has drive of blooming and The also years, and all years maintenance years going is into as next second I the the good frac we’re also that industries. going more year, And six in our midstream of also will and on contribute. visit, which second we’re to new revenue. part

scale excited really of they this building going a up. And we’re the team it is and dynamic acquisition. and we’re So and very energetic to about nice job did good they’re business

John Watson

turn congrats the I’ll Well, it acquisition. on back.

Operator

Thank you.

line question next of with Lundberg Jacob Suisse. from Our comes Credit the

now is line open. Your

Jacob Lundberg

there. in and good Hey, the I on guys. update just remind if morning an you in of target? was of just on question valves we the XQ, of What the Saudi. sort timing, could can ramp first And in guess, factory contribution revenue then magnitude facility get our the

Prady Iyyanki

Yes. built part business. year. the you active as were this open to know, do and shop they of The operation Jacob, was early was

third good starting transactional orders they’re on approvals pretty through quarter The So mostly so but which the the we through intake did a trickling fourth side and orders quarter. we order but coming in, slow, get are we tactical are in coming had anticipated. side, the

the we companies get months. the in next did but Saudi few not chemical we from the get petro have approval one Aramco So received of yet, that big one quarter, we do Approval expect in the to third

So also we’re the to year, expecting fourth going next in orders we quarter.

has our outlook not So changed.

what think investment is is million the of told first bookings we’ve I year and in community third XX year. this the the

of we orders could and outlook progress were confident impact pretty approvals be – the and we’re also we offering. coming we’re making with through and good So

Lyle Williams

more to Prady, in specifically add to just So the quarter.

enough contribution from I so of Saudi, a he that conclude ahead you was us. to color think not still significant there yet is gave

Jacob Lundberg

all questions kind if out squeeze synergies cost of sort us acquisition. there? but economics sort know you or tell you. we product service Thank – can on I little could of it. a whereas And mix then to if and revenue lot do color what we of you anything then unit give it’s of looks what Got together, there, there’s wondering you think was then more market kind about go of I just the share like can a if back what the

Prady Iyyanki

for the customer the so this the customers. I drilling midstream with be base, base synergies top And particular great markets which acquisition are pretty From this think, line customer with the in significant Forum’s case, would the and synergies acquisition. is to

cycle radiator and The maintenance same. power second the and pretty is at a that maintenance much the look If the a of aftermarket. I of cycle the

the So GHT And price the what didn’t savings with it of time savings cycle the the radiator, and radiators, publically give an fluid then pretty here. I we maintenance radiator don’t the for downtime of close I process even but could – and power. same upgrade at that’s a from the the radiator levels both end replace maintenance brand opportunity upgrade our to they say do new The for helps a a economic than significant. when price as replacing little is with listen, for the greater an is our location, customers are is doing in same color Hopefully us and significant customers. horizontal is we range standpoint, that a

Lyle Williams

Yes.

to just add side. business equipment think this success what said, has So Prady I great the had new a on

radiator new So share these days. retrofit it of great very market mentioned there. radiators are he of the to But that is in of out base share, high market sales opportunity installed terms a XX,XXX

GHT So somewhat Prady today similar product the expand revenue. the and a mentioned fluid And have Forum great a but we aftermarket is the then opportunity to as revenue to overall service cost related, end. more

product, relatively but key these you’re reducing engine, of that’s your is to one think think be it and got is cost and easier cute a critical to clean service, that protect you’ve easier going component I because to I large to are low investment. if a it maintenance which a a style, that, to your addition is are thing very cost. that to radiators in then And about

proposition the fabulous So value is for just customers. our

Prady Iyyanki

aftermarket Well, add the on and probably color some can last, I too.

Lyle Williams

got our in when in power and our We really – our products the think our Prady. and frac terms of in in terms we’ve capability Thanks, with had of we building manifold success there. great products were ends terms aftermarket Yes. those. market space, about great we’ve Jacob, products of

customers forward. service some GHT our some have and ability able magnifies our perspective to from will service to give aftermarket with our We really team us products to and and fit our it strong going obviously we’re legs the

mentioned Finally, when That’s products maintenance the and side and revenues you the help customers, in Prady the to with them pair fit for been drive radiator order digital we’ve diagnostic what there. aftermarket ourselves in technology understand with on another make up, technology and requirements our nature to Forum. smart doing of smart their incremental

Jacob Lundberg

sync incremental in Got I an of from talked it. between tariffs in would million cost $X about allocated more in, XQ. you That’s could P&I one helpful. the that How And impacts completions? if kind be

Lyle Williams

Lyle Jacob, this is again.

So, versus any competitors. tariffs in we’re I – think not disadvantaged the of disproportionately thinking key about we’re is for that really not our us point

effect in that So strategies mitigate we’ve the now incremental we’re in quarter. the of tariffs in time. we’re flowing the full right and of the seeing over What segments impact to mix dedicated into seeing team two those those what we’d the there working fourth got good with of the and see is a we’re through balance sheet terms probably P&L, and even waiting between

with that back to strategies to partners. So on chain customers longer it’s depend going and play that’s work exactly term how out, going our share able supply and much and – how mitigation we’re seeing push to our how

share of So and between customers impact our able we’ve half our to far about been tariff vendors. the

So looking the to that is of on. tariff mitigate we’re other half impact what working

Prady Iyyanki

I includes to goes going help also if strategy, competition because some which surface. us tariff our we’re will away create think that the nonstrategic even sourcing mitigation for

Pablo Mercado

towards completion more side probably at your both segment weighted segments are more mentioned, I impacted, question this the as in terms being little to Just of a impacted, is address time. what specifically

Jacob Lundberg

Okay. helpful Thank Understood. color. guys. and the you Super Appreciate very much.

Lyle Williams

Thanks, Jacob.

Operator

Rice. Malloy line with Johnson [Operator Instructions] Our the next of comes question Martin from

now is line open. Your

Martin Malloy

having for Could morning. the conversations you that customer maybe of regarding component maybe outlook subsea, and of gas in you’re non about oil the Good talk tone offshore that? the and the

Prady Iyyanki

has your And is nonoil question, rigs Forum Drilling Marty, three pipeline at unfolds you P&I in as if including significant robust. on tendering on and know, drilling offshore, And and drilling of front recovery ahead to significant international the been the on the meaningful. Great question one subsea. as in the and are the side pretty East including and on quarters, of Martin drilling can building And segment completions the offshore to engine Middle recover have and Yes. the gas contribution earnings is projects, capital potential the segment last subsea in for a you jack-up the outside, first six Asia, we answer and the the subsea look the us. from projects, not cylinder projects now side, which be drilling and

first the and in important line give back to that, help you our contribution, front side, in in XX% & will also offshore for is mentioned line what have Marty, Subsea and also But as talked & that will also from The XXXX. that’s four them for international the international matured and Drilling but to product and you also the about at But the the our Global about international XX% go confident meaningful So that to recovery last what I Drilling the be if can one. Completions, some in only than going downhole is but So say very completion Right? product it a Subsea months, Completions’ be offshore of the to we of product call, contribution some five offshore first will lines segment the was contribute a not one a stage. orders next Drilling will were we’re the is because in just and announce are for we meaningful will subsea softness XXXX. recovery broader America international, picture North is it the tubing in right? into path segment would big I three levers,

incremental about of I XXXX. exceed for The acquisition, pass that to rebound they the market is there one to the which several in solid big expect into our thing pretty the then and new And a parts finally, segment customers. GHT not is mitigation away, his be to even will they we then third And the of second new don’t the which are stronger best And the talked the contribute be which XX% half on from to completions half a and much XXXX. we have contribution fourth could expect pipeline the in move GHT and happen able going we to we level. be mean, second and tariff would penetration one strategy is the the of parts. the previous just the first the will levels But us if part mitigate meaningfully tariffs strategy,

Martin Malloy

Okay, great. gas and opportunities subsea oil the And on out then that the there? are non side,

Prady Iyyanki

market, I there Yes. downtown just One, Marty give some job nonoil done color. teams some is. me you to nice part let the our of with color penetrate mean have to gas and of the a give the

you XXXX. color in with can quarter If going if up from defense than at East with primarily activity is the you will into would a second North is are of that we an and out some of I to not for extent XX% spend highway order XX% China one XXXX, in that, is more driving look I creating defense coming that opportunity from what be going sort of customers. and gas. different also what’s And and will but was say, And look quarter. going will nonoil big say, budgets subsea more XXXX, the being in in will at of grow America come built the nonoil business a than the gas the is first which more of into revenue – submarine announced And defense this be the coming safely opportunity

and the baseline we for into good oil gas get will the you’re be will think XXXX, do and the subsea And comes both nonoil but up meaningfully expect it, now top of the going which to the recovery, which slow, on we which us. gas the to the orders, some as So away. and a gas pretty and oil help business go So have good really tripling top offshore could for subsea about and the it, and will contribute of gas the business slope, nonoil

Martin Malloy

you. Thank Great.

Operator

Thank you.

the like now to further Mark further at back I turn any no have call We time. Traylor would questions this remarks. for

Mark Traylor

you you Sarah, may New in the for the forward Thank to you. us speaking joining with Year. We guys this Thank morning. look you call. again end

Operator

today’s gentlemen, for This participating today’s in conference. does and program. you Ladies thank conclude

great Everyone, You have all a day. may disconnect.

Forum Energy (FET) 30 Oct 182018 Q3 Earnings call transcript